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USDA sets the stage for the June 28 Planted Acreage Report

The USDA’s June Supply-Demand report decreased the expected size of the 2013 corn crop, but using a reduced national yield estimate, not the expected reduction in acreage. USDA statisticians are not yet ready to quantify barren corn acres just yet, and may wait until the June 28 planted acreage report. Nevertheless, the lower production did not impress the traders and new crop corn contracts reflected the disappointment of the market.

The June World Agricultural Supply Demand Estimate (WASDE) cut 135 million bushels from the estimated size of the corn crop getting started. USDA attributed that to late planting and corresponding yield deterioration. Total production was estimated at 14.005 billion bushels, based on a national average yield of 156.5 bushels, planted on 97.3 million acres. Compared to the May estimates:

The carry-in from the 2012 crop was raised 10 million to 769 million bushels, total production dropped from 14.140 billion to 14.005 billion bushels. Feed use was cut from 5.325 billion to 5.200 billion bushels. Ethanol use was raised 50 million bushels from4.860 billion to 4.900 billion bushels. Export estimates remained steady at 1.3 billion bushels. The carry-out was lowered from 2.004 billion to 1.949 billion bushels. USDA raised the average price for corn by 10 cents to a range of $4.40 to $5.20.

USDA said, “Corn imports are raised 25 million bushels based on the strong pace of imports to date and expectations that feeders in some locations will continue to supplement domestic supplies as old-crop corn becomes tighter during the summer months.”

“Global coarse grain beginning stocks are also lowered as a reduction in 2012/13 China corn production is only partly offset by an increase in 2012/13 Brazil corn production this month. China corn production is lowered 2.4 million tons based on the latest government revisions for the 2012/13 crop. Brazil corn production is raised 1.0 million tons for 2012/13 based on higher reported area for the safrina crop which will be harvested in the coming weeks.”

The June WASDE report was a carbon copy of the May report for new crop soybeans. However, some changes were made in the supply-demand balance sheet for old crop soybeans. Compared to May:

Soybean imports are raised 5 million bushels to 25 million based on relatively strong imports through April and expected additional gains through the end of the marketing year. Soybean exports for 2012/13 are reduced 20 million bushels to 1.33 billion bushels reflecting exceptionally low shipments and sales in May and competition from Brazil. USDA added 25 cents per bushel to the price of new crop soybeans, which are now in a range of $9.75 to $11.75.

Although soybean exports are reduced, U.S. soybean meal exports are increased this month reflecting stronger-than-expected shipments this spring as importers have been slow to shift to South American supplies. As a result of increased soybean meal exports, the U.S. soybean crush is projected at 1.66 billion bushels, up 25 million. Soybean ending stocks for 2012/13 are projected at 125 million bushels, unchanged from last month.

For wheat, the June WASDE report reflected the higher production estimates project in the June Crop Production Report, stemming from an increased head count per square foot. With the larger crop come higher supplies, and USDA reported,

“Projected production for 2013/14 is up 23 million bushels as higher yields boost forecast production of Hard Red Winter wheat in the Southern and Central Plains and Soft Red Winter wheat across the South and Midwest. Exports are projected 50 million bushels higher for 2013/14 with strong early season sales and a reduced outlook for foreign production this month. Ending stocks for 2013/14 are projected down 11 million bushels. Projected stocks of 659 million bushels remain at a 5-year low. The projected range for the 2013/14 season average farm price is raised 10 cents on both ends to $6.25 to $7.55 per bushel.

Due to global weather issues, USDA said, “World production is projected at 695.9 million tons, down 5.2 million from last month with reductions for Ukraine, Russia, and EU-27. Persistent dry weather in key growing areas of southeastern Ukraine and adjoining areas of southern Russia reduces production prospects 2.5 million tons and 2.0 million tons, respectively.

Winter wheat production is forecast at 1.51 billion bushels, up 2 percent from the May 1 forecast but down 8 percent from 2012. Based on June 1 conditions, the United States yield is forecast at 46.1 bushels per acre, up 0.7 bushel from last month but down 1.1 bushels from last year.

Hard Red Winter production, at 781 million bushels, is up 2 percent from last month. Soft Red Winter, at 509 million bushels, is up 2 percent from May. White Winter, at 219 million bushels, is up 1 percent from last month. Of the White Winter production, 11.5 million bushels are Hard White and 207 million bushels are Soft White

Summary:

USDA’s June numbers for corn, soybeans, and wheat were generally distasteful to the market and only old crop soybeans enjoyed minimal success on the day. The market wanted USDA to cut corn acres and carryout, but any acreage reduction will be saved until the June 28th report and based on better data. Old corn remains tight, but cutting the export estimate was seen as a negative. For soybeans, the USDA did not change its new crop estimate, although planting delays may figure into the June 28 acreage report and the July production estimate.